Individual Retirement Arrangements (IRAs) are the most basic sort of retirement account but the choices among IRAs can be confusing—different plans offer different options based on income and eligibility criteria. The Bank of Bennington has IRA Service Professionals who are happy to help you understand the options so that you can choose the plan that best suits your needs.
To find out more about your retirement planning options and for complete details regarding eligibility requirements, visit the IRS.gov website for Retirement Plans or come in and talk with one of our IRA professionals.
A Traditional IRA is a personal savings plan that gives you tax advantages for saving for retirement. Contributions to a Traditional IRA can be tax-deductible for the year that you make the contribution. That means that you can reduce your current year taxable income and for individuals who are in a higher tax bracket, this can be a reasonable savings. Contributions are made on a pre-tax basis and are considered income in the year they are distributed. Distributions can be subject to penalty if withdrawn before the age of 59 ½ and are mandatory after the age of 70 ½.
If you have earned income and expect to be in a lower tax bracket when you retire, a Traditional IRA may be best choice for you.
A Roth IRA is a personal savings plan with features that are opposite of a Traditional IRA. Contributions to a Roth IRA are not tax deductible and do not offer current tax year benefits. Eligible distributions from Roth IRAs are not included as income in the year they are withdrawn. Distributions are not required when you turn 70 ½—this will be important as people live and work longer.
If you have earned income and expect to be in a higher tax bracket when you retire, a Roth IRA may be the best choice for you.
A SEP is a Simplified Employee Pension plan that gives employers a simplified way to make contributions toward their employees and their own retirement.
A SIMPLE IRA is a Savings Incentive Match Plan for Employees that gives small employers a simplified method to make contributions toward their employees’ retirement and their own retirement. Under a SIMPLE IRA plan, employees can make contributions and the employer can make matching or non-elective contributions. Distributions are considered income in the year they are distributed.